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Price Of Platinum Vs. Gold
Relation between the prices
Both platinum and gold are precious metals, and as such give very good value to the investor. But the price of platinum vs. gold makes a very interesting study, as they react differently to economic environments and to market changes.
For instance, if there is a prolonged period of economic growth, the value of platinum and its price accelerates to a greater extent when compared to gold. On the other hand, if there is a prolonged period of financial deterioration and there is a long economic recession, then platinum value drops down and the price of platinum vs. gold shows an under performance. This correlation between platinum and gold occurs because of the status of gold which is the ultimate form of investment and possesses a status that is out of the financial system. Even in times of recession, people tend to invest in gold as it presents a secure haven, during times of turmoil.
Effects of the economic situation
Once the relative price of platinum vs. gold is set in motion due to a particular economic environment, the trend continues for at least four years. Hence, in times of economic boom the price of platinum vs. gold is generally higher in the case of platinum, whereas in times of recession, gold rules the roost and commands a higher price, due to its high status and security value.
Volatile prices of Platinum
However, both platinum and gold are in the same field as both are commodities which are in powerful bull markets. They are both very precious and in some aspects platinum seems to be more precious than gold. This is because the price of platinum vs. gold is usually higher and also because its supply is lesser than gold. Additionally, there is a greater industrial demand for platinum in automobiles, apart from being used in jewelry. The annual production of platinum is only about 8% that of gold, which makes it all the more valuable. There are a whole lot of other applications for platinum, such as turbine blades and medical sensors. The investment in platinum is also on the rise with bars, coins, and asset backed ETFs.
There is a very strong correlation between the price of platinum vs. gold and usually the platinum price behavior can be explained with the daily movement of gold prices. The exception is during times of crisis and panic, as this is a time when investors start selling all kinds of assets, except gold, recklessly which brings down the price of platinum below that of gold. This is the nature of the platinum price market, which is exposed to a lot of fluctuations and volatility, unlike gold, which commands the status of a secure investment.
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